SAN FRANCISCO (Reuters) – The board of Uber Technologies Inc [UBER.UL], including two new appointees of former Chief Executive Travis Kalanick, will meet on Tuesday to consider proposals that diminish the co-founder’s influence, strip early investors of supervoting power and secure a multibillion-dollar investment, sources said.

Proponents of the measures believe they can prevail on each issue, despite the addition to the board of two new directors named by Kalanick and a legal threat from early investors, two people familiar with the matter said.

Kalanick, ousted by investors in June, contends that fellow Uber board members are moving too fast on a dramatic restructuring and wants to delay a decision on governance changes, another source said. It is not clear how many measures will be voted on Tuesday.

The proposals are the latest flashpoint between Kalanick and Uber investors spearheaded by Silicon Valley’s Benchmark, which led the board revolt against Kalanick. Directors are divided about what role Kalanick should play and whether he should retain control over a large part of the board.

The company is seeking to shore up its reputation after a series of scandals. Proponents believe the proposals would improve corporate governance ahead of an expected initial public offering and illustrate the support of major new investors – SoftBank Group Corp and growth-oriented investor Dragoneer Investment Group.

Uber’s new chief executive, Dara Khosrowshahi, last week proposed cutting the number of board seats controlled by Kalanick to one from three, raising the seats effectively controlled by Khosrowshahi to five from one, and eliminating supervoting rights, which give early shareholders multiple votes per share.

A second proposal, which proponents intend to be linked to the first, would allow internet firm SoftBank and Dragoneer to invest around $ 10 billion in Uber, two sources said.

That would include about $ 1 billion in new Uber shares at the current $ 68 billion valuation, with the rest earmarked for buying shares from current investors at a discount, the sources said. It is not clear how many shares current investors would sell at the terms discussed.

Kalanick responded to the proposals on Friday by appointing former Xerox Chief Executive Officer Ursula Burns and former Merrill Lynch Chief Executive Officer John Thain to fill two open director seats. Benchmark and others have legally challenged his ability to name the directors.

Burns and Thain took their seats Monday and will be eligible to vote at Tuesday’s board meeting in San Francisco, three people said.

Still, if the changes in voting control pass, the company could face a legal roadblock. Venture capitalist Shervin Pishevar, investor Stephen Russell and other shareholders threatened Monday to sue directors who voted for the plan, including Kalanick.

Supervoting rights are valuable and important for holding the company accountable, they said. Stripping the rights without consent is unfair, according to a letter seen by Reuters from attorney Mark Geragos to Uber board members Kalanick, Garrett Camp and Ryan Graves.

Each of them stand to lose voting power because they hold shares that carry more than one vote a piece. Though unlikely to make all the concessions sought by fellow board members, Kalanick has shown willingness to cut supervoting rights in the name of strengthening governance, a source said.

“Our clients are confident that, following sober reflection, you will avoid this ill-advised misadventure,” Geragos wrote.

Switching to a one-vote-per-share policy could remove one reason for investors to hold onto Uber shares, creating more demand for SoftBank’s purchase offer. It could also help Uber, if it goes public, avoid being barred from the S&P 500 and other stock indexes that this year instituted rules against unequal voting rights.

Goldman Sachs, acting as a financial adviser to Uber’s board, has been working for weeks since an initial agreement with SoftBank to amass the shareholder proxies and support necessary to move forward with the transaction, according to a source.

Khosrowshahi, who is meeting London’s transportation regulator Tuesday to appeal the non-renewal of Uber’s operating license in the city, is expected to call into the board meeting, a source said.

Reporting By Paresh Dave and Liana Baker in San Francisco and Tom Hals in Wilmington, Delaware; Editing by Peter Henderson and Lisa Shumaker

SAN FRANCISCO (Reuters) – Uber Technologies Inc [UBER.UL] co-founder Travis Kalanick on Friday said he had appointed two new directors, a surprise move that publicly reignited a board battle over the role of the ousted former chief executive.

Uber investors are divided over whether Kalanick, who was pressured to step down as CEO earlier this year in the wake of several company scandals, should himself be on the board and whether he can name two other directors.

The company and new Chief Executive Dara Khosrowshahi are scrambling to portray Uber as a reformed company that is responding to concerns including sexual harassment claims and a U.S. bribery probe.

Kalanick, still one of the largest shareholders, said in a statement he had appointed former Xerox Chief Executive Ursula Burns and former Merrill Lynch Chief Executive John Thain as directors.

“I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights. It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John,” he said. He did not specify the proposals he opposed.

The appointments were a ”complete surprise“ to Uber and its board, the company said in a statement. ”That is precisely why we are working to put in place world-class governance to ensure that we are building a company every employee and shareholder can be proud of,” it added.

Division among Uber investors exploded in public in August, when Benchmark Capital filed a lawsuit to force Kalanick off the board and rescind his ability to fill two other seats on the panel, accusing him of concealing a range of misdeeds. Yucaipa and other Uber investors defended Kalanick and asked Benchmark to divest its own shares and step down from the board.

A Delaware judge later that month stayed the Benchmark lawsuit and sent it to arbitration, pushing the dispute out of public view and delivering Kalanick a victory.

Kalanick’s action on Friday could be subject to a new legal challenge. Benchmark or other Uber investors could attempt to block the appointments by asking the Delaware judge to issue a so-called “status-quo order.” The judge last month did not grant such a request.

Kalanick’s lawyer at the time told the court that Kalanick had not rushed to fill the seats. The New York Times also quoted Kalanick’s lawyer as telling the court Kalanick had the power to fill the seats under the pre-arbitration “status quo.”

Benchmark did not immediately respond to a request for comment.

Reporting by Liana B. Baker and Paresh Dave; Writing by Peter Henderson; Editing by David Gregorio and Lisa Shumaker

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